What is the winning number for biofuels in transport?

The EU package on renewable fuels and climate is advertised for Wednesday January 23rd. The winning Number 20 seems to be secured for energy efficiency improvements, the fraction from renewables and the reductions of GHG. All should be 20% and achieved by the year 2020, but what about Number 10? 10% has been suggested as a target for biofuels in transport, but has been heavily criticised by one of the EU research institutes JRC only recently, as reported in The Financial Times. The critique is broad and deals with price, GHG-emissions, cost over benefit , energy security and employment. All factors said to have either too small positive effects to be significant or, flat out, large negative effects.

Different but expected views

As can be expected, these views are not shared by all. The division in responses largely follows expected lines. Producers of biofuels are sceptical over the criticism while several environmental NGOs find the critique justified. WWF has, however, stated their support for a goal of 5.75% (mentioned in 2006) and that biofuels should be a part of a broader strategy. Looking into the JRC-report (that has been leaked) one cannot help feeling that there is something strange about the situation.

It could be the general Brussels nervousness when all the lobby-organisations and country representatives are doing what they can to cut a better deal . They might be so heated now that they shoot at everything. The difference between 5.75% and 10% cannot be the catastrophe outlined in the JRC-paper! Or can it?

It could also be that concern over relations to food production and food prices have risen. A concern that is legitimate, although it has been shown that the issue is more complex.

The evidence is not convincing

The JRC Report is built on the anticipation that, up until 2020, all biofuel will come from feedstock such as wheat, barley, maize and beet, i.e. be of the first generation. They remark that second generation will not be available until after 2020. They further anticipate that present production will require heavy subsidies (30-65 Billion Euros). They also make the point that biofuels used in heat and electricity production would be more useful from a GHG perspective.

They may be right in all respects, but still not convincing! Primarily because building of markets may require that we have to go through a time when inferior technology is used (to build the demand) and pave the way for the better technology (that satisfies future demand). Such a process generates “losses” that are turned into “learning investments” when the better technology is in use. The report actually envisages this possibility.

So, why is the calculation stopping at 2020 when the gains may be ahead? And does the report really mean that the present agricultural situation in Europe is satisfying and even optimal? It is rather likely that quite a few of the subsidies used today to produce, for example, wine and oranges, that are spilled in rivers or sent to a dump, could be more useful if the farmers could instead make biofuel right away.

The criticism in the JRC Report is important, but should be used to improve the strategy rather than sack it.